Shipping Containers

LCL Shipments in Logistics & Shipping – Meaning, Costs & More

Exporters always prioritize favorable shipping conditions while exporting their goods. Given the multiple routes available for shipping, there is a wide range of options available to choose. One needs to evaluate several factors, such as the time-sensitivity, the size and nature of the product, and the size of the shipping container, before finalizing the shipping container.

The shipping containers come in standard sizes, which are directed by the International Organisation for Standardisation (ISO). They are 8, 10, 20, 30, or 40 feet in length, for you to choose from, depending on the size of your shipment. However, in an instance when the package size is significantly less than the container size that it is to be shipped in, you may be inclined to share the container space with another exporter, saving yourself the trouble of bearing the costs of an entire container.

LCL Shipment – Meaning
LCL or (Less than Container Loads) in shipping means a process where the exporters mutually share the container space when the package size is significantly less than the maximum load a container can carry. It is a win-win situation, both for the shipping company as well as the exporters. The shipping company recovers the cost of the container while sharing the box makes transportation inexpensive for the exporters.

Not only is this a great way to save up on transport costs, but it also makes for a much more eco-friendly, responsible, and sustainable global shipping practices.

Trivia: Another name for LCL shipments is “groupage shipments”- as they are formed by grouping smaller, individual packages together.

How does the procedure in LCL Shipment Work?
Once you opt for an LCL shipment you opt for a door to door service, the procedure is quite simple and effective. Here is a step by step guide to get your goods shipped to your customers through LCL shipping:

Step 1 : Registering with a shipping company
Since shipment companies play a pivotal role in getting your product delivered flawlessly to your customers, choosing the right shipping partner is an extremely crucial part of the process.

Step 2 : The shipping company will get the information about your package
Once you contact the shipping company for your transportation needs, they will enquire about all the details of your shipment. You’ll have to provide them with information about the delivery location, dimensions of your consignment as well as the time at which they can collect the product from you. They process all of this information and ascertain what other packages can your shipment be grouped with, and the ship that can be assigned to deliver your cargo.

Step 3 : LCL Dispatch and Shipping
Once your package reaches the shipping company’s warehouse, preferably near a port. It is clubbed with other smaller packages which are to be delivered along the same trade route and then moved into a shipping container. This process is often known as ‘Container Stuffing’. This container is then lifted off and put on a ship, which sets sail to deliver the goods to the desired location.

Step 4 : Arrival and Delivery
Once the ship arrives at its destination, the container is taken off and transported into a warehouse for segregation purposes. Once the ungrouping is completed, the shipping company delivers the products to your customers at their doorsteps.

Costs/ Charges included in LCL shipment
Since the shipping process consists of multiple stages, each stage contributes a fair bit to the overall LCL shipping cost. Contrary to popular opinion, the actual shipping of the cargo incurs lesser cost than the grouping and ungrouping of the packages at the warehouses. This is because there is a fair bit of manpower and infrastructure involved in the process.

LCL shipping charges are generally computed based on the dimensions of the package i.e. the length, width. The standard unit for LCL shipping charges is USD per CBM (cubic meters). However, if the weight of the package exceeds 1000 kgs (1 ton), then the costs are levied based on the weight. The chances of this happening with LCL packages are rare since LCL shipping is recommended for smaller load size.

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Calculating CBM of your LCL shipment
To calculate the dimensions of your product in CBM, all you have to do is to pack it into a cubical/cuboidal package and measure the box’s length, width, and height. For example, if your product fits into a package that is 3.2 meters long, 3.5 meters wide, and 4 meters high, then the volume of the package would be 3.2 X 3.5 X 4 = 44 CBM. Make sure you convert all the units in meters before multiplying them.

Note:- LCL shipments are generally 20ft and 40ft standardized containers by all the major shipping companies internationally.

What is the difference between FCL and LCL?
As opposed to Full Container Load (FCL) shipments that provide dedicated containers to transport your freight, LCL shipments allow you to rent only a limited space inside a container. While both of these methods are extremely popular in their own right and have their utility, an exporter is likely to face a situation where they have to ponder what’s the best choice for them.

To make things easier, here’s a brief comparison between both on the basis of few parameters:

Since FCL shipments have only one destination, as opposed to LCL shipments having multiple ones, FCL guarantees a much faster delivery speed for your shipments.

If your product is fragile, FCL shipments are much better suited to get them safely delivered to the destination, simply because there is much more movement of goods during the grouping and ungrouping stages LCL shipping, which may result in mishandling the goods and damaging them.

LCL shipping allows you to have a steady flow of goods shipped into or out of your warehouse, without having to worry about the risks of your warehouses being overburdened. This makes LCL shipping much more inventory-friendly, as compared to FCL.

This is a slightly tricky aspect, considering that while LCL shipments generally cost lesser overall as compared to FCL, their per-unit CBM prices are greater than those for FCL shipping. This means that there exists a break-even value, after which, it’s more economically viable to go for FCL shipping even if your package doesn’t take up the entire container space.

So why is LCL shipment more expensive than FCL? Because the shipping companies invest a lot of time and effort into figuring out the optimal way to group the packages. Additionally, they also have to take into account the charges they have to bear, in case they’re unable to find other similar, smaller shipments to club yours with. All of these contribute to the costs going up.

Also read: FCL and LCL | Meaning & Difference

Tracking of LCL shipment
Thanks to the technological advancements in the field of communication and tracking, all the major shipping companies today provide their clients with state of the art shipment tracking facilities. While the process of tracking LCL shipments is slightly more challenging than tracking FCL shipments, most companies provide a considerable amount of real-time information on LCL shipments during the entire delivery process.

Also Read:

CFS Container Freight Station | Meaning, Role & Functions
Demurrage – Meaning & Charges in Shipping
Bill of Lading | What is it, Types & Usage
What is a commercial invoice?
Deemed Exports | Meaning, Eligibility, and Benefits
Deemed Exports under GST | Procedure for Refund

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